Tax Benefits for Home Owners

Nobody likes to pay taxes and that's a fact. But taxes are necessary for the state to fulfill its purposes and the IRS is implacable when it comes to collecting. Yet, nobody should pay more than one is obliged to and so, when it comes to calculating the exemptions, benefits and deductions on taxes it is imperative to be trained. As a homeowner you are entitled to many benefits and deductions on taxes that can provide a lot of ease to your finances. Learn what you can deduct, what you cannot and where to turn to if you have any doubts.

Home Loan Interest Tax Deduction

When you take a mortgage loan, the payment for the money owed is the interests on the loan. The interests you pay each year on your mortgage are tax deductible and thus, you can include them on your tax presentations for reducing your tax payments. Bear in mind, however, that there are certain limitations for these deductions, especially when the amounts are significantly high because the administration believes then that your payment capacity is higher and any amounts that surpass certain level are no longer deductible. For more information about this issue, you need to contact a tax advisor or certified public accountant that will be able to evaluate your particular situation.

Home Equity Loans, Lines of Credit or Second Mortgages

Just like with mortgage home loans and due to the fact that these loans are also secured with your property and the administration wants to protect ownership, the interests on home equity loans and lines of credit or second mortgages are also tax deductible. Remember that just like with home mortgages, there are limitations that should be taken into account when the amount of interests is high. Remember that the loan needs to be secured with the property as only home loans and loans based on equity have interests which are tax deductible.

Home Improvement Costs Can be Tax Deductible

Though with some limitations, when you transfer ownership of the property you can deduct some of the costs associated with repairs or improvements to the asset from the capital gains tax associated with the property's sale. Thus, you should keep this in mind if you are considering selling your property in the future as you will need all documentation that proves the costs and charges you incurred in due to the repairs or improvements you had to do on your home or condo if you want to be able to deduct them.

Non Deductibles

If you have a second property and the IRS considers that property a rental property you can deduct several costs like insurance, property taxes and other costs associated with the commercial transaction. However, there are costs that cannot be deducted regardless of the use you give to a property. For instance, utility fees, non-interest charges on mortgage loans, and non-rental insurances like fire insurance cannot be deducted from taxes. But always remember that all particular situations are different and you should contact a tax advisor for proper guidance.

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